BATU’s tax reprieve in Uganda

Kampala, Uganda | ISAAC KHISA | Products of cigarette maker, British American Tobacco (BATU) manufactured at its Kenyan subsidiary in the East African Community will now be exempted from Uganda’s excise duties.

This follows a ruling in the East African Court of Justice (EACJ) on Jan 25, barring the Uganda revenue Authority from imposing the tax on the company’s products from the neighbouring state due to discriminatory rates, pending the case hearing and determination.

BATU filed the case at EACJ in last August, claiming that the new excise duties imposed on cigarettes imported from Kenya into Uganda were discriminatory and in contravention of regional customs regulations.

BATU claims Uganda enacted the Excise Duty Act No. 11 of 2014, which made provision for an excise duty on cigarettes uniformly applied to all such goods originating from any of the EAC Partner States.

But in 2017, the said Act was amended to creat a distinction between locally manufactured goods and imported goods.

Consequently, URA imposed a higher excise duty on goods imported into Uganda from Kenya and imposed a lower duty on goods manufactured in Uganda, the company claims.

The EACJ also took the view that, the justice of the matter dictates that the respondent would suffer less injury from being temporarily prevented from exercising its right to collect the extra excise duty billed to the applicant if the interim orders sought in the present application were granted, than the injury the applicant stands to suffer as the consequence of paying the additional duty.

BATU recorded a profit of Shs7.8 billion in 2016, down from Shs20.2 billion at the end of 2015 citing increased taxation, discontinuation of the tobacco leaf export businesses and a tough economic environment.